Small Overcharge Resulted From Late Fees and Lump-Sum MCI Arrears

Rent-stabilized tenant complained of rent overcharge in 2017. Tenant moved into the apartment in 1991 at a monthly rent of $400. By the time of his complaint, tenant paid $805 per month. Tenant claimed that the overcharge was based on illegal MCI rent increases and illegal fees or surcharges.

The DRA ruled for tenant in part. Tenant's renewal lease did have a clause stating that the rent could be increased or decreased by order or annual updates of the DHCR or Rent Guidelines Board. But a slight overcharge was the result of an improper calculation of the MCI increase over a five-month period during 2017. As a result, triple damages wouldn't apply and landlord could offset the small overcharge with any rent underpayments by tenant.

Tenant appealed, claiming that the $20 renewal increase from the base date rent was improper. Tenant again contested some late fees charged by landlord. In response to tenant's PAR, the DHCR sent the case back to the DRA.

Contrary to tenant's claim, RGBO No. 44 permitted a 2 percent or $20 renewal increase, whichever was greater, for a one-year renewal commencing between Oct. 1, 2012, and Sept. 30, 2013. The DRA properly applied a $20 rent increase. The DRA also properly found that landlord was entitled to the MCI rent increase. But landlord should have refunded $57 to tenant for excessive late fees. Under DHCR Fact Sheet #44, the amount of a late fee can't be more than $50 or 5 percent of the monthly rent (whichever is lower). Landlord also should return any lump-sum payment collected for MCI arrears. These are temporary increases and can only be collected over a 12-month period at a rate of 6 percent of the legal rent. 

Ford: DHCR Adm. Rev. Docket No. IS410013RK (11/3/21)[4-pg. document]